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started its humble beginning as a manufacturer of down feather products owned by Shunde Township under the name ‘Shunde Guizhou Feather Products Factory’. The company was founded in 1978 by Liang Qingde, the former deputy chairman of the Industrial and Transportation Office of Shunde Product Factory from 1973 1978. The company produced down feather products for overseas clients to earn foreign exchange. At that time, the company was jointly owned by the Foreign Trade Department of Guangdong province and the Shunde government, with Liang Qingde as general manager. This gave the company the privilege to not only obtain an export quota but also to access public funds and thus resources for development. In 1980s, huge infrastructural changes coupled with the restriction of exporting products to other countries from China, caused the company to face potential risks. Thus in 1991, Liang Qingde made a strategic decision to search for new business opportunities with greater potential for growth. After analyzing the Chinese consumer market for a year, he made the decision to enter the electrical appliance market with the introduction of the microwave oven. Liang Qingde identified the microwave oven as a product with great potential in China, as they were all imported and sold at relatively high prices. He observed that microwave ovens had the potential to become popular and indispensible in modern cities in China, citing the rise of the Chinese economy due to change in living styles and habits of the Chinese people. Moreover, he recognized that this business will be an excellent business opportunity if produced and sold at an affordable price compared to that time market leaders, Toshiba, LG and Whirlpool. The lack of associated technology for manufacturing microwave ovens and technical expertise in China made Liang Qingde to think a lot to overcome the business challenges. In 1992, individual entrepreneurs were freed from state control with the further keyed up of the transformation of the centrally planned economic environment in the country by opening up Guangdong and Shanghai as industrialized areas. Since then, the Shunde local government had begun to offer more legal recognition and freedom to privately owned enterprises by protecting the property rights of production assets, innovation and capital, and attracting foreign investments and industrial manufacturing development in the area. These private ownership
There on.rights enabled Liang Qingde to start up his new business in the manufacture of microwave ovens in 1992. a core component of the microwave oven. while the other parties benefit from getting low manufacturing costs without having to set up their own operations in China. Among total export volume of Galanz from the start of its global operation to 2003. its magnetron factory had an annual production capacity of 16 million units or 67% of the total production requirement of 25 million units. At last. Having conquered the domestic market. the company was able to design and produce its own magnetrons to support its microwave oven production in 2000. The company started out with a clear competitive strategy based on cost leadership. The company was still short of the component. This made the company to initiate a major investment in magnetron R&D in 1997. OEM is proven to be a swift method of tapping into the global market for Galanz. which represented 25.3 million from Toshiba and searched for engineering professionals throughout the country to set up the factory. Galanz reached into the global market through the OEM (Original Equipment Manufacturer) method in 1998. By the end of 2003. In 1993. This shows a change in Galanz internationalization strategy. Liang Qingde purchased the microwave oven production blueprint for US$0. The company further increased its business by selling 250. It designed and . Galanz was still short of the component to meet the demand in the market. from foreign suppliers such as Toshiba and Panasonic. Earlier. Galanz had purchased all its magnetrons.1% of the domestic microwave oven market. Ltd. This means that Galanz sells its products to other companies which will re-brand the products under their own names. The company produced its first microwave oven in 1992. the ratio of independent brands and OEM rose from 1:9 to 3:7. due to the tremendous growth in its microwave oven business. switching focus into getting consumer to recognize Galanz as an independent brand. Eventually. due to the tremendous growth in its microwave oven business. However. he found a group of engineers who were knowledgeable of microwave oven technologies. The rapid growth in the increase of the sales of the company had threatened these magnetron suppliers who decided to reduce the supply of magnetrons to the company.000 microwave ovens in 1995 in China. 10. and officially changed its name to Galanz Enterprises Group Co.000 microwave ovens were produced and sold. the company quickly gained significant domestic market share.
Management Structure: The company is now led by Led by Liang Zhaoxian. Seoul and North America.S. general managers and operations staff. These advantages are the key reason why Galanz was able to surpass other Chinese manufacturers.96 billion in 1999 to RMB18 billion in 2006. It gained a leading position with more than 50% of the global market share in microwave ovens in 2007. By using OEM. Galanz went into the global market inexpensively by avoiding the costs associated with promoting its brand and establishing a distribution network. The company currently has 13 subsidiaries. the transfer of production capacity from developed countries and full utilization of the available production capacity. The Key Success Factors It is undisputable that one of Galanz’ strength is the ability to produce goods with a substantially lower cost. It also enabled the company to use the OEM partners’ manufacturing equipment to produce its own branded products to be sold in the domestic market. European. The choice of employing OEM method was proven to be a crucial success factor. had allowed it to compete successfully with major players such as Panasonic.000 employees in 2003. 52 sales offices in China and branches in Hong Kong. Its initial method of internationalization made Galanz to outperform other Chinese manufacturers. Galanz found itself having to outsource part of the magnetron production to other OEM manufacturers since by then its customers had begun to insist that Galanz use its own branded magnetrons in Galanz-supplied microwave ovens. Its brand name was well known in China and overseas. . combined with its enhanced R&D ability.. The company adopted a highly centralized decision-making and execution system that only had three levels of personnel: senior directors. Galanz’s capability of producing microwave owns at low cost. The total sales volume of all types of Galanz microwave ovens climbed from 2 million units in 1997 to 22 million units in 2005. Products in both OEM and OBM versions were sold in the U. the vice-chairman and chief executive officer. The company grew from 20 employees in 1993 to more than 10. South American and African markets. Its revenue increased from RMB2. Toshiba and LG in the global electrical appliance market.implemented operations system to help achieve lower cost through economy of scale.
have formed a Galanz-centered game rule. from the original evacuation out of the industry to focus all resources operation of this new "point". It has repeated using the strategy of price reduction and has minimized the profit of microwave oven industry. Galanz adopted a puerile strategy to achieve maximum size and the highest concentration of manufacturing industries to enhance the market competitiveness and reduce business risk. Galanz has continuously initiated 7 attacks to its antagonists in price wars within a short period of only five or six years.Marketing Channel: Galanz had been strengthening its sales network in all parts of the world. and growed gradually by raising the threshold of microwave oven industry and by adopting the strategy of “small profits but quick turnover”. and the key components of development basis. and it is so often a significant price reduction in its cost. Economies of scale. use of the total cost of low cost to market good quality products. and have had the foreign brands that are capable of competing with Galanz be forced to retreat from the competition of . The price wars have built a barrier for Galanz and the microwave oven industry to survive in the competitive world. There were 52 sales offices across China and branches were set up in major exporting countries. expand production scale. Under the direction of cost leadership strategy. by the scale of operations. The Success of Strategic Analysis of Galanz: Galanz’s growth period in the overall strategy is focused on the core point: the large-scale industries operating resources transferred to the new option of "microwave oven" project. and take the road of specialization. including China. simply. Galanz has defeated many corporations in price wars. and achieve extraordinary development of enterprises. during recent years. It defeated its antagonists by ceaselessly setting up higher and higher barrier for competition. The company’s performance in this area is very prominent by further reducing overall manufacturing costs through constantly developing new products and know-how. is that while increasing the input of all factors of production. Galanz into microwave oven industry has always maintained overall cost leadership strategy. Cultural differences in overseas markets and getting market information know-how hampered the success of popularizing Galanz with global consumers.
Galanz has realized its brand operation in the process of taking its monopoly position through price wars. the price wars have also made the domestic enterprises. Galanz is a manufacturing enterprise. as a matter of fact. The greater its manufacturing scale is. in some people’s eyes. However. the lower its average cost will be. In addition. Strictly speaking. . which has been left for Galanz only. to compete with antagonists by use of price could be dated back to a long time ago. Galanz reduced its price by about 40% in August 1996 and October 1997 respectively. Galanz makes its great achievement only through “price wars”. flinch to enter into the microwave oven industry. both the formulation of market promotion strategy and grasping of opportunity have fully revealed the wisdom of Galanz. and have avoided the competition with other manufacturing enterprises which have the low labor force cost and resources of production elements similar to Galanz in the same industry. The reason for this phenomenon is that the greater the manufacturing scale is the more limited the space for cost reduction will be. Galanz is only good at using price. However. Of course. In the overall development period of Galanz. since 1998. such a marketing tool. Galanz’s potential advantage in price reduction has faded away. At the same time. regarding the selection of breaking point during the transformation from garment industry to the household appliance industry. so it is also called as “butcher” and “killer”. which have great strength and want to make more profits through multi-polar operation. Galanz has no longer reduced its price by such a great margin.Chinese market.
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